Credit Access Helps U.S. Families Cover $400 Shock Bill in Study

Cash may be king but it isn’t the only indicator of financial resilience, according to research drawing on the bank records from 5.9 million American households.

Expanded access to short-term credit may provide low-income households with a crucial lifeline when faced with unexpected expenses, according to a report by JPMorganChase Institute released Tuesday.

The research looked at households’ cash balances, income, spending, and credit access in December 2023. It showed 92% were able to cover a $400 surprise bill with some combination of cash on hand, disposable income, and short-term credit.

Among low-income families, more than three quarters could cover the unexpected expense, but many had to cover it with disposable income or with credit, the study found.

There were also differences across racial groups. More than 70% of Asian and White households were able to cover a surprise $400 expense with cash on hand, compared to about 60% of Black and Hispanic households.

The report cautioned that focusing on cash as the main measure of a household’s ability to manage a surprise expense can lead to an overly pessimistic view of Americans’ financial resilience.

“Recent economic data has revealed conflicting perspectives about how Americans are faring financially, and how they view the health of the US economy,” said Chris Wheat, president of the JPMorganChase Institute, said in a statement. “Understanding the full picture of household liquidity is essential to accurately evaluating the financial resiliency of both consumers and communities.”

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